Contracts

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What is a contract? What are some questions asked to see if a contract exists?

A contract is a promise that the law will enforce.

Is it certain that the defendant promised to do something?

If they did promise, is it fair to make them honor their word?

If they did not promise, are there unusual reasons to hold them liable anyway?

What is the purpose of a contract?

Parties enter into contracts attempting to control their future.

Contracts exist to make business matters more predictable.

What is judicial restraint? Why might a court practice this?

When a court taks a passive role and requires the parties to fulfill whatever obligations they agreed to, whether the deal was wise or foolish.

Judges often say that it is not their job to rewrite a deal that the parties crafted.

In most contract cases, judges do their best simply to enforce whatever terms the parties have agreed to.

Even if the contract results in serious harm to one party, a court will typically enforce it.

Judicial restraint makes the law ________ ?

Judicial restraint makes the law less flexible but more predictable.

What is judicial activism? Why might a court practice this?

In contract law, this means that a court will ignore certain provisions of a contract, or an entire agreement, if the judge believes that enforcing the deal would be unjust.

Further, a court may be willing to artificially create a contract where none existed, if the judge believes that is the only way to avoid injustice.

Judicial activism makes the law _______ ?

Judicial activism makes the law more flexible but less predictable.

A contract has what four elements? Explain each one.

Agreement. One party must make a valid offer, and the other party must accept it.

Consideration. There has to be bargaining that leads to an exchange between the parties.

Legality. The contract must be for a lawful purpose.

Capacity. The parties must be adults of sound mind.

What are some other important issues that may arise in contract cases?

Consent. Neither party may trick or force the other into the agreement.

Written Contracts. Some contracts must be in writing to be enforceable.

ThirdPartyInterests. Some contracts affect people other than the parties themselves.

PerformanceandDischarge. If a party fully accomplishes what the contract requires, his duties are discharged.

Remedies. A court will award money or other relief to a party injured by a breach of contract.

What is a noncompetition agreement contract?

It is a contract between an employee and an employer, where the employee agrees not to enter into competition with the employer after s/he terminates employment.

It is typically in effect for a certain period of time after employment ends.

What is the difference between a bilateral and a unilateral contract?

In a bilateral contract, both parties make a promise.

In a unilateral contract, one party makes a promise that the other party can accept only by doing something.

What is the difference between an express and an implied contract?

In an express contract, the two parties explicitly state all important terms of their agreement.

In an implied contract, the words and conduct of the parties indicate that they intended an agreement.

What does executory and executed mean in contract terms?

A contract is executorywhen one or more parties has not fulfilled its obligations.

A contract is executedwhen all parties have fulfilled their obligations.

Define the following agreements.
Valid, Unenforceable,Voidable, and Void Agreements

A valid contract is one that satisfies all of the law’s requirements. A court will therefore enforce it.

An unenforceable agreement occurs when the parties intend to form a valid bargain but a court declares that some rule of law prevents enforcing it.

A voidable contract occurs when the law permits one party to terminate the agreement.

A void agreement is one that neither party can enforce, usually because the purpose of the deal is illegal or because one of the parties had no legal authority to make a contract.

What are two remedies created by judicial activism and how do you distinguish them?

In promissory estoppelcases, the defendant made a promise that the plaintiff relied on.

In quasi-contractcases, the defendant did not make any promise, but did receive a benefit from the plaintiff.

What must a plaintiff prove if they claim promissory estoppel?

Even when there is no contract, a plaintiff may use promissory estoppel to enforce the defendant’s promise if he can show that:

The defendant made a promise knowing that the plaintiff would likely rely on it

The plaintiff did rely on the promise; and

The only way to avoid injustice is to enforce the promise.

What must a plantiff prove if they claim quasi-contract?

Even when there is no contract, a court may use quasi-contract to compensate a plaintiff who can show that:

The plaintiff gave some benefit to the defendant

The plaintiff reasonably expected to be paid for the benefit and the defendant knew this; and

The defendant would be unjustly enriched if he did not pay.

Explain quantum meruit and what it means.

If a court rules a contract as a quasi-contract, it will generally award the value of the goods or services that the plaintiff has conferred. The damages awarded are called quantum meruit, meaning that the plaintiff gets “as much as he deserved.” The court is awarding money that it believes the plaintiff morally ought to have, even though there was no valid contract entitling her to it.

Created in 1952, what was the intent of the (UCC) Uniform Commercial Code?

The drafters intended the UCC to facilitate the easy formation and enforcement of contracts in a fast-paced world.

The Code governs many aspects of commerce, including the sale and leasing of goods, negotiable instruments, bank deposits, letters of credit, investment securities, secured transactions, and other commercial matters.

UCC Article 2 governs the sale of goods. What does goods include?

Goodsmeans anything movable, except for money, securities, and certain legal rights. Goods include pencils, com- mercial aircraft, books, and Christmas trees. Goods do not include land or a house, because neither is movable, nor do they include a stock certificate

Which one prevails over the other? Common law or the UCC?

First you must note whether the agreement concerns the sale of goods. Most of the time the answer is clear, and you will immediately know whether the UCC or the common law governs.

In some cases, as in a mixed contract for goods and services, it is not so obvious. In a mixed contract, Article 2 governs only if the primary purpose was the sale of goods.